Inflation
The silent tax on cash — why 'safe' money loses purchasing power and real (after-inflation) returns are what count.
What You're BuyingBeginner 4 min read· Lesson 9 of 13 in Investing Fundamentals
Nominal vs real
If your investments earn 7% while inflation runs 3%, your REAL return is ~4% — that's the growth in what you can actually buy. Cash 'earning' 0% at 3% inflation is losing 3% a year with certainty. Risk isn't only volatility; guaranteed purchasing-power loss is a risk too.
Inflation and markets
Rising inflation pressures interest rates up, which lowers the present value of future profits — long-duration growth stocks suffer most. Equities are historically a decent LONG-run inflation hedge (companies raise prices), but a poor short-run one during inflation spikes.